Pre-approval process explained
This information is of a general nature only and is intended to give you a brief overview of the pre-approval process. Specific details relating to your loan and purchase will be provided at time of appointment.
The first process is the loan application whereby we work out the options available to you, the rates, and products. You then choose the lender and product, we collect all required information and then submit to the lender for their approval. The turn around time for lender approval will vary between lenders from 2 days to 2 weeks depending on the time of year, market conditions, current specials and whether you are going for pre-approval or full approval.
If the lender is happy with your application they will issue what’s called a ‘Conditional Approval’. The approval is valid for anywhere from 3 to 6 months depending on lender. A conditional approval generally means that the lender has checked the information and has approved your application for finance subject to any conditions they may impose, such as property valuation.
This basically means you are now free to start looking for your next home or investment property with most of the paper work all done.
Purchasing a Property:
From here you can now place offers on property with confidence. Note that you still need to sign the contract subject to finance (Queensland / Victoria / South Australia) or do not exchange contracts until finance is unconditionally approved by the bank (NSW / Victoria) but we will discuss this further with you.
When you make an offer most agents will present the offers by completing a contract with all the details listed. Once you and the seller have agreed on price we can then arrange for a valuation to be conducted.
A valuation is done primarily for the banks benefit to ensure that the property is worth what you are paying so if there is ever and issue they can sell the property and get their money back. It can also work to prevent you paying more than the property is worth.
The bank will instruct a independent external valuation company. The valuer will then contact the real estate agent directly to arrange an inspection of the property. This process can take up five business days for the valuation to be completed and returned to the lender.
Formal Approval (Unconditional Approval):
Once the valuation is returned the lender has 3 business days to issue formal approval. Formal approval means that your finance is fully approved.
The lender will then post you out the mortgage documentation that completely details your loan and all fees. For clients living overseas we will have the documents posted to me first, check they are ok, and then forward on by international courier.
MAP has examples of what the mortgage documents look like with the standard terms etc. If you would like to see these please email us for them.
Once you receive the mortgage documentation, please complete and return as quickly as possible by express or registered post keeping note of the tracking number.
Once the mortgage documentation is returned your solicitor/conveyancer is then free to call up the lender and book in settlement.
On settlement day your solicitor, the seller’s solicitor and the lender will meet and carry out settlement. You are not required to attend settlement and in the normal course of events will receive a phone call from your solicitor or real estate agent congratulating you on your purchase and advising that you can now pick up the keys.
If you have any questions at all do not hesitate to call or email us.